Have and maintain a plan
Despite the uncertainties of the economy, Bonham and his team spend a lot of time planning and forecasting, because it’s critical to have a plan.
“The minute you make a plan, it becomes obsolete relatively quickly,” he says. “The value in the planning process, part of it, is in the end results. You come up with a series of charts that looks impressive and make people look smart, but the value is more in what you go through to develop the plan. … It’s a structured way to make you think about all the potential threats that are out there and all the potential opportunities that you can capitalize on.”
You end up with a plan that tells you where you’re going for the next three months, six months, year, five years or whatever time it may be, but you’ll also have to come up with all the contingency plans in case certain parts do or don’t happen.
“While you tend to come up with one plan that, ‘Here’s what we think can happen,’ you also have to think of even 50 other potential plans that may materialize depending on what does happen in the marketplace,” he says. “It really is the discipline of thinking through all that stuff that’s important — not just the one plan you put on paper. It forces you to be prepared for all the various things that could happen and could develop in the marketplace.”
He says one of the best ways to make sure you develop a good plan and adapt it accordingly is to stay connected to your customers.
“A lot of the changes get observed first at the customer level,” Bonham says. “You really have to stay close to what those guys are doing, any changes in their behavior and what they value from their suppliers.
“Obviously you can observe their behavior by just tracking what their volume trends look like. Are they buying more or less from you? And that’s one valid way of doing it. That doesn’t really get you inside the hearts and minds of your customers. Again, there’s probably no substitute for getting in front of them and face-to-face interactions.”
Communication is key in those interactions.
“You always want to let them know how important they are to your business,” Bonham says. “They are the lifeblood, and they’re the ones who pay the bills and keep the lights on and are writing checks to us that we can pay our employees and that sort of thing.”
Connecting with customers means understanding their needs and challenges.
“The best way to do that is really just to ask them,” he says. “You can do that in a number of forms. If you have a thousand customers, you can send surveys to some of them and compile the data and try to analyze it, but the face to face is the best way to get the best information.
“You should be out there asking them what’s important to them, whether it’s Internet surveys, mail surveys, phone surveys, in-person interviews, but really just using those interaction opportunities to really understand what they need and what they want from their suppliers and making sure you’re set up to deliver on what’s important to your most important customers.”
You really want to understand why they buy from you instead of from somebody else. Customers generally have a lot of choices on how to spend their scarce dollars, so you certainly want to understand why they choose you. But your current customers aren’t the only people you need to talk to.
“Almost as important is understanding the guys who are not buying from you and what you’re not doing that’s leading them to go somewhere else,” Bonham says. “It really is about what’s important to them that makes their purchase decisions so you can set up your business to be able to satisfy the needs of the customers who you deem to be most desirable and most attractive.”
In addition to staying in touch with your customers, you also have to stay close to any regulatory environments that affect your industry and any technology changes that could affect your plan.
“If you have a good planning process, it really means that you’re staying on top of what’s going on with all the various things that could impact your business and trying to anticipate what may happen as a result of what those guys are up to,” he says. “You’re not going to have a batting average anywhere near 1.000 but as long as you’re doing better than your competitors are at trying to anticipate that stuff, you’re going to end up doing OK.”
Throughout it all, the biggest key is to try to be proactive instead of reactive, and by doing that, you’re more likely to get out of the other side of the downturn in one piece.
“It’s a very tough challenge to be ready for some of the crazy things that can happen to happen,” Bonham says. “Most people kind of get comfortable when things are going their way, and you assume that prices and margins and all that stuff will keep going up forever. It’s easy to get complacent when things are going your way, so you have to keep challenging yourself to remember that there are cycles and everything.
“You have to have a healthy sense of perspective in that the economy moves in cycles and what comes up, comes down, and what goes down, also comes up.”
And lastly, Bonham says you have to maintain a long-term view.
“You definitely don’t want to be absorbed by a sense of doom and gloom,” he says. … “You want to sort of keep a long view, but also it’s a good time to be thinking about growth as long as your balance sheet is in good enough shape, so you can do some of those things. It’s a good time to be laying the groundwork for future growth and when things do improve.”
How to reach: Direct Fuels, (817) 354-2700 or www.dfuels.com